Correlation Between Spineguard and Dekuple

Can any of the company-specific risk be diversified away by investing in both Spineguard and Dekuple at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Spineguard and Dekuple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spineguard and Dekuple, you can compare the effects of market volatilities on Spineguard and Dekuple and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Spineguard with a short position of Dekuple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spineguard and Dekuple.

Diversification Opportunities for Spineguard and Dekuple

-0.19

Correlation Coefficient

Spineguard  Dekuple

Good diversification

The 3 months correlation between Spineguard and Dekuple is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Spineguard and Dekuple in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dekuple and Spineguard is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Spineguard are associated (or correlated) with Dekuple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dekuple has no effect on the direction of Spineguard i.e., Spineguard and Dekuple go up and down completely randomly.

Pair Corralation between Spineguard and Dekuple

Assuming the 90 days trading horizon Spineguard is expected to under-perform the Dekuple. In addition to that, Spineguard is 3.12 times more volatile than Dekuple. It trades about -0.06 of its total potential returns per unit of risk. Dekuple is currently generating about 0.0 per unit of volatility. If you would invest  3,600  in Dekuple on October 15, 2024 and sell it today you would lose (40.00) from holding Dekuple or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spineguard  vs.  Dekuple

Spineguard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spineguard has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Dekuple

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dekuple has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Dekuple is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Spineguard and Dekuple

The main advantage of trading using opposite Spineguard and Dekuple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spineguard position performs unexpectedly, Dekuple can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dekuple will offset losses from the drop in Dekuple's long position.

The idea behind Spineguard and Dekuple pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.